Confidence jumps as mining states dust themselves off

Confidence across the property sector has lifted to the highest level in four years, surging by nine points over the quarter, according to the latest ANZ/Property Council Survey.

Nationwide confidence rose from 132 for the September 2017 quarter to 141 in December. A score of 100 is considered neutral.

“This is a strong result,” says the Property Council’s chief executive, Ken Morrison.

“While the housing construction cycle is off its peak, the industry is taking confidence from the overall strength of the economy.

“Every jurisdiction is experiencing significant lifts in confidence. The mining states of Queensland and Western Australia are dusting themselves off with strong increases in the forward work schedules, and staffing level expectations.”

Morrison says there is a “change in mood and sentiment”, as the industry’s rating of the federal government’s economic performance trends back to neutral. Queensland and South Australia are the only states reporting significant negative ratings.

Notably, WA’s confidence has risen by 24 points over the last 12 months.

Daniel Gradwell, chief economist with ANZ, says the survey provides further evidence that most of the mining-related adjustment is behind us.

“Western Australian firms are now expecting economic growth in the state to rise over the next 12 months – the first positive survey in over three years,” he says.

Gradwell says the construction outlook is strong nationally and will support business investment.

“The construction outlook for the aged care, industrial, and office segments is the strongest since this survey began,” he says.

This positive outlook is consistent with recent building approvals data, which are now “sitting at the highest levels on record,” Gradwell adds.

Sentiment in the housing market generally improved, Gradwell explains. While the outlook is “much softer” than during the earlier peak, “solid outlooks” for construction activity, prices, and labour “all suggest that the slowdown in the housing market will continue to be a gradual cooling, rather than a sharp decline”.

Industry expects that interest rates will rise and that the availability of debt finance will continue to be constrained.

“The industry understands that with growth comes the expectation of increased interest rates and that the regulators and banks will continue to act judiciously,” Morrison concludes.

Find out more about the ANZ/Property Council Survey and supporting sponsor RCP.